Australia, New Zealand Dollars Advance on European Debt Optimism

Australia’s dollar gained versus most major peers after France and Germany said they want a rewrite of the European Union’s rules to tighten economic cooperation, spurring optimism the region is tackling its debt crisis.

New Zealand’s dollar advanced as global stocks and raw-materials prices rallied even as the country’s Treasury department lowered its economic growth forecast and a private report showed a Chinese services index declined. Both currencies also rose as Italy’s Cabinet approved austerity and growth measures.

“There’s been positive news flow from Europe today,” said Mark McCormick, a New York-based currency strategist at Brown Brothers Harriman & Co. “It’s been positive for the risk environment.”

The Australian dollar advanced 0.8 percent to $1.0301 at 1:39 p.m. New York time. The currency strengthened 0.6 percent to 80.12 yen.

New Zealand’s currency, nicknamed the kiwi, gained 0.7 percent to 78.26 U.S. cents. The kiwi appreciated 0.4 percent higher at 60.87 yen.

The Aussie briefly erased gains amid bets the Reserve Bank might cut interest rates to spur the economy in the face of a possible global slowdown triggered by Europe’s debt crisis. The central bank is scheduled to issue a policy statement at 10:30 p.m. New York time.

Common Platform

The currency strengthened as German Chancellor Angela Merkel and French President Nicolas Sarkozy presented a common platform for a Dec. 8-9 summit of EU leaders in Brussels on the debt crisis. They backed automatic penalties for deficit violators and locking limits on debt into euro states’ constitutions.

The MSCI World Index of stocks climbed 1.3 percent, and the Standard & Poor’s GSCI Index of 24 raw materials increased 0.4 percent.

New Zealand’s gross domestic product is likely to increase about 3 percent in the year ending March 31, 2013, the Treasury Department said in a report on its website today. That compared with 3.4 percent expansion forecast in the Oct. 25 pre-election fiscal and economic update.

A purchasing managers’ index for services in China fell to 52.5 last month from 54.1 in October, according to a statement issued by HSBC Holdings Plc and Markit Economics today. A reading above 50 indicates expansion. China is Australia’s largest trading partner and New Zealand’s second-biggest export destination.

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